CARIBBEAN EXAMINATIONS COUNCIL

REPORT ON CANDIDATES’ WORK IN THE

SECONDARY EDUCATION CERTIFICATE EXAMINATION

JANUARY 2011

PRINCIPLES OF BUSINESS

GENERAL PROFICIENCY EXAMINATION

Copyright © 2011 Caribbean Examinations Council

St Michael, Barbados

All rights reserved.

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GENERAL COMMENTS

This year, 4,273 candidates registered for the Principles of Business General Proficiency examination.

The composition of the examination was as follows:

Paper 01 - Multiple Choice

Paper 02 - Essay Paper

Paper 03/2 - Alternative to SBA (Private Candidates)

Paper 01 consists of 60 multiple choice items taken from the three profiles of the syllabus. The

performance of candidates on this paper was satisfactory.

The mean mark was 56.37 out of 60 compared with 54.48 in 2010 and 54.95 in 2009. Approximately 69

per cent of the candidates scored at least 50 per cent of the marks for this paper.

Paper 02 comprises two sections. Candidates were required to answer three compulsory questions in

Section I and two of four optional questions in Section II. The mean mark for this paper was 49.93 out

of 100. The means were 40.32 and 51.83 in 2010 and 2009 respectively. The marks ranged from 0 to 94.

Paper 03/2 — the alternative to the School-Based Assessment (SBA) — is an examination offered to

private candidates. For this examination, candidates were required to complete a business plan using a

given template and a case study.

Performance on this paper continues to improve. The mean mark was 16.35 out of 40 compared with

13.78 in 2010 and 12.36 in 2009. No one achieved the maximum mark on this paper; however, the

highest mark was 34 out of 40.

DETAILED COMMENTS

Paper 02 – Essay

Section I – Compulsory

Question 1

This question tested candidates’ knowledge of different types of businesses as well as the differences

between a free market economy and a planned or command economy. Approximately 65 per cent of the

candidates attempted this question. Performance on this question was less than satisfactory. The mean

mark was 7.78 out of 20.

Part (a) of the question required candidates to state four characteristics of a partnership and four

characteristics of a private limited company.

Most candidates were able to score the maximum available marks in this part of the question. Candidates

who failed to score seemed to have confused the characteristics of partnerships with those of private

limited companies.

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In Part (b), candidates were required to discuss the benefits a business would enjoy if it converted from a

partnership to a private limited company.

The majority of candidates was unable to discuss the advantages but merely stated their responses and

therefore could not earn the maximum marks.

In Part (c), candidates were required to outline three distinguishing features of a free market economy as

opposed to a planned or command economy.

Candidates, for the most part, could not accurately distinguish between these two types of economies.

The following are suggested responses to Question 1.

(a) (i) Four characteristics of partnerships are:

They do not need to be registered and therefore are easily formed.

They consist of 2–20 persons.

There is lack of continuity — if a partner dies, that business ends.

The owners have unlimited liability.

(ii) Four characteristics of private limited companies are:

They must include the term ‘limited’ as part of their name.

The shareholders enjoy limited liability, in that, in the event of bankruptcy they stand to lose only

their investment and not their personal assets.

Their shares cannot be traded on the Stock Exchange.

These firms have unlimited life in that they continue after the death of a shareholder or

shareholders.

(b) Two advantages a business would enjoy by converting from a partnership to a private limited

company are:

The partnership has unlimited liability but the private limited company has limited liability. This

means that investing in a private limited company would mean that shareholders can only lose

what they have invested and nothing more.

The private limited company has the potential to raise more capital than the partnership because

the membership is larger than that of a partnership.

(c) Three ways in which a free market economy differs from a planned economy are:

In a free economy private individuals and organizations own the factors of production, whereas in

a planned economy, the state owns and controls the factors of production.

In a free economy, there is competition between the various producers of goods and services for a

share of the market. On the other hand, in a planned economy there is no competition between

the producers of goods and services.

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In a free economy, a large variety of goods and services are produced to satisfy the needs of the

consumers. In a planned economy however, quotas of essential goods to be produced are

determined by the state.

Recommendations

Students should be exposed to as many features of businesses as possible. They should also be given

practical work to examine the extent to which the features discussed are true for similar businesses

operating in their communities.

More emphasis needs to be placed on distinguishing and comparing characteristics of the different types

of businesses. Teachers should guide students in understanding the various verb cues in questions such as

state, discuss and outline.

Students should also be encouraged to answer in complete sentences. Note that in the discussion the

points showing clearly the advantages were brought out and explained in complete sentences. Note also in

comparing the two types of economy both sides were highlighted, those of the free market economy as

well as the planned economy. The linking phrases were used to show two like things were being

compared such as whereas, on the other hand, however etc.

Question 2

This question tested candidates’ knowledge of business, including the public and private sector. The

question was attempted by 90 per cent of the candidates, the majority of whom gave good responses.

Part (a) required candidates to compare private and public sector organizations using three given features.

This part of the question was well done by most candidates.

Part (b) required candidates to outline two benefits of a business to both the sole proprietor and the

community. The majority of candidates were unable to outline the benefits of the business to the sole

proprietor. Some candidates seemed to have misinterpreted the question, giving benefits of the business

to other businesses. Some candidates merely supplied statements about a business without showing how

they are considered to be benefits.

In Part (c), candidates were required to discuss how the government can promote business activity in the

country. The majority of candidates gave acceptable responses. However, weaker candidates focused the

discussion on how businesses can advertise their products.

The following are suggested responses to Question 2.

(a) Public sector versus Private Sector

(i) Ownership and control

The private sector of a country is made up of private citizens or individuals. The

firms that are owned by private individuals such as sole traders, partnerships and

private limited companies belong to the private sector. The public sector, on the other

hand, refers to the government, the state, national/local government or municipalities.

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If a business is owned by the public sector it means that it is state or government

owned.

(ii) Objective

The objective of private sector businesses is to make profits. They are set up to cater

to the needs and wants of private individuals while the public sector aims at

providing essential goods and services to the country and caters to the needs of its

citizens.

(iii) Source of Capital

Firms in the private sector obtain capital from persons who choose to buy shares in

the enterprise. They also obtain capital from friends, family members, and personal

savings or from financial institutions such as credit unions or commercial banks.

The public sector, however, obtains funding primarily from taxes, rates, levies and

statutory deductions, as well as loans from governments/institutions and funding

from donor agencies.

(b) Benefits of a business to the sole proprietor and the community:

(i) The sole proprietor

A sole proprietor has the satisfaction of being his/her own boss and thus has the

confidence of making his/her own decisions.

He or she has no limits to his/her earnings because all the profits belong to the

owner of the business.

(ii) The Community

The community benefits in that goods and services are produced that they can easily

purchase thereby reducing transportation costs because of the proximity.

The people in the community can gain employment opportunities and firms may

even sponsor sporting and cultural events.

(c) How government can promote business activity:

The government provides security against crime by way of the police, regiment and

coast guards thus creating and maintaining a safe environment in which business can

thrive.

The government enacts legislation to protect businesses for example, the Hire

Purchase Act, Health and Safety Laws and the Sale of Goods Act. These laws

protect the interest of businesses as well as consumers so that neither of them is

unfairly treated.

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The government provides financial and technical advice for businesses through its

small business and entrepreneurial programmes. This enables individuals to provide

their own employment by starting their own businesses.

The government provides regulations designed to protect the interests of businesses.

Recommendations

i. Teachers should ensure that students are able to differentiate between the words ‘public sector’

and ‘public limited companies’. This can be achieved by getting students to explore and discuss

the differences between them.

ii. Students should also know the differences between verb cues such as compare, outline and

discuss. Note that in the model responses, a comparison is achieved when like things are

compared and both sides are explained and a linking phrase or word is used to successfully

achieve this.

iii. Students should be given more exposure to how businesses help individuals and communities.

Some of this knowledge can be had from the newspaper and Internet articles.

iv. Teachers should provide students with the opportunity to practise answering more CSEC

questions so that they would become familiar with the expectations of the questions.

Question 3

This question tested candidates’ knowledge of advertising and sales promotion. The question was

attempted by 95 per cent of the candidates. Performance on this question was satisfactory. The mean

mark was 11.55 out of 20.

Part (a) required candidates to state three benefits of advertising. The majority of candidates were able to

score the maximum mark in this part showing clearly that they understood how advertising benefits

businesses. The weaker candidates were quite vague and gave extremely brief answers.

In Part (b), candidates were required to distinguish between advertising and sales promotion. Most

candidates were unable to give reasoned responses, but rather, gave a definition of each. Moreover, most

candidates failed to acknowledge the long term/short term criteria when giving these definitions. The

majority of candidates however gave good examples of advertisements and sales promotion.

Part (c) required candidates to discuss two benefits which a supermarket can receive from engaging in

public relations activities such as the awarding of scholarships. This part of the question was answered

poorly by the majority of candidates. Some candidates gave benefits of the scholarship initiative to

stakeholders, other than the supermarket, such as the general public.

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The following are suggested responses to Question 3.

(a) Three benefits of advertising are :

It makes consumers aware of different products that are available.

It encourages competition among businesses.

It increases the sales of firms.

(b) Difference between advertising and sales promotion:

Advertising is a non-personal sales technique which is relatively long term and the sponsors are

always identified. Some examples of advertising are:

Airlines commercial on television about visiting Miami

Advertisements for online universities in the U.S. and U.K

Billboard and newspaper advertisements for cars

Sales promotion, on the other hand, are short term incentives given to middlemen and consumers

to encourage sales. It is usually used to support advertising and personal selling and is usually a

one-time effort and is run for a limited period of time. Some examples of sales promotion are:

Digicel freaky Fridays

Buy one get one free or at half price

Free samples of perfume

(c) Benefits of public relations activity to the supermarket

This public relations activity benefits the supermarket in that customer loyalty would likely

develop as more customers will support this supermarket as they perceive that they may

receive additional benefits.

The supermarket may gain new customers and a larger share of the market because of this

activity. This will be a form of indirect advertisement for the supermarket.

The government may consider giving the firm tax breaks and other considerations in return

for this service to the community.

Recommendations

Teachers are advised to use more practical exercises in the classroom, for example, the use of role plays,

projects to create advertisements, the critique of advertisements on television and radio, newspapers and

to show the differences between the strategies used to promote sales.

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Section II – Optional Questions

Question 4

This question tested candidates’ understanding of personal budgeting and forms of savings. It was

attempted by approximately 65 per cent of the candidates, the majority of whom gave acceptable

responses. The mean mark was 13.84 out of 20.

Part (a) required candidates to identify sources of personal income. This was generally well done.

Candidates correctly identified sources of personal income such as salaries/wages, rent, interest from

savings, profits from ownership of business, pensions and dividends from ownership of stocks/shares. A

common error made was identifying loans from financial institutions as a source of income.

Unfortunately, a few candidates identified stealing as a source of personal income.

Part (b) (i) required candidates to explain the term ‘budgeting’. The majority of candidates scored the

maximum mark for this part of the question by indicating the idea of planning/managing one’s income

and expenditure/spending.

Part (b) (ii) tested candidates’ knowledge of the advantages of budgeting. Overall, responses were fair

with identification of advantages such as planned spending, less overspending, planned saving and to

provide for future needs.

In Part (c), candidates were required to state two factors to be considered when choosing a form of saving.

Suitable responses should have included credibility of the institutions, the interest rate, other benefits

offered, accessibility to savings, the degree of risk, penalties for early withdrawals and goals of the saver.

While most candidates scored the maximum available mark, most of their responses seemed to reflect

personal experiences rather than business knowledge.

Part (d) required candidates to discuss two reasons for saving money in a bank rather than at home. Most

candidates correctly identified and discussed the following main reasons: safety, the returns earned on

savings, the use of savings as collateral and the minimization of the temptation to overspend due to

relative inaccessibility of the money.

Few candidates identified additional reasons such as access to online banking and use of ATM machines

and cheques.

The following are suggested responses to Question 4.

(a) Four sources of personal income are: salary, rent, interest from savings and royalties.

(b) (i) Budgeting refers to the planning and allocation of expenses and income to prevent over

expenditures and to indicate how money is spent and if income is sufficient to cover expenses.

(ii) Two advantages of budgeting are:

It restricts spending and prevents one from over spending.

It will indicate if there is a need to increase one’s income.

(c) Two factors that must be considered when choosing a form of savings:

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The credibility of the institution as well as the instruments that are being offered to ensure

that one’s principal and any interest earned will be returned at maturity or when needed.

It is important to look at the rates of return on interest so as to capitalize on the best returns

for the time the money is saved.

(d) Reasons for saving money in a bank as opposed to keeping it at home

Safety is a very important issue when deciding to put one’s money in a bank as opposed to

keeping it at home. In the bank, money is less likely to be stolen, and even if it is, and it can

be proven that it is not due to negligence, then it would be replaced by the bank. Money left

at home can be stolen or burnt up in the case of a fire.

Appreciation of one’s money is another important issue when deciding on a savings option.

Money left in the bank will likely appreciate because money deposited attracts interest while

money kept at home does not.

Recommendations

Teachers are encouraged to place increased emphasis on ethical issues related to sources of income as

well as other business practices. They should also encourage the use of relevant business jargon and

appropriate vocabulary.

Question 5

Question 5 tested candidates’ knowledge of the factors of production. The question was attempted by 35

per cent of the candidates. Performance was satisfactory. The mean mark was 11.11out of 20.

Part (a) required candidates to identify the traditional factors of production in relation to the five Ms of

production. The minority of them was able to successfully link the five Ms given to the traditional factors

of production.

Part (b) required candidates to distinguish between the following pairs of terms:

1. primary production and tertiary production

2. subsistence level of production and domestic level of production

3. backward linkage and forward linkage

The majority of candidates was unable to make a clear distinction between the terms. The greatest

challenge in this part of the question was making a clear distinction between ‘backward’ and ‘forward

linkage’.

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In Part (c), candidates were required to discuss the factors to be considered when deciding on a location

for a large shopping mall. The majority of candidates merely listed the factors rather than discussed

them. There was a small percentage of candidates who argued convincingly the reasons for their

importance to the issue as well as their impact.

The following are suggested responses to Question 5.

(a) The traditional factors of production and their corresponding ‘M’ of production.

‘M’ Factors of Production

Men - Labour or entrepreneurship or human resources

Money - Capital or financial resources

Material - Capital or raw materials

Machinery - Capital or fixed assets or equipment

Method - Entrepreneurship or management or planning or strategizing

(b) Primary vs. Tertiary Production

(i) Primary production includes the extraction of raw materials from nature through fishing,

hunting, gardening, mining, while tertiary production covers the provision of services that

may include medical, banking, transportation, communication and teaching.

(ii) Subsistence vs. domestic level of production

Subsistence level of production caters for the basic needs of individual and families and the

general satisfaction of a household. Domestic level of production, on the other hand, involves

producing goods and services not just for the individual and his family, but also for the entire

local market.

(iii) Backward linkage vs. forward linkage

When a manufacturing firm in the second phase of production forms a link with a firm in the

primary phase of production, this is a backward link. For example, KFC linking with chicken

farmers. Where a firm in the primary phase of production seeks to link with a manufacturing

firm in the secondary phase of production, this is deemed a forward link. For example, apple

farmers linking with Nestle apple juice company.

(c) Two factors that must be considered when selecting a location for a large mall are:

• Accessibility to a large source of shoppers so that the stores in this mall would be able to

maximize their sales and realize high profits.

• Geographical considerations such as proximity to main roads or a network of roads such that this

would allow for easy access to the mall for customers.

Recommendations

• Students should use the mark allocation for the questions as well as the key verbs such as define,

explain, discuss as a guide to the level of response required.

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• Students should be exposed to more contact hours on this topic as their responses suggest lack of

knowledge of fundamental concepts.

• Students should be encouraged to read questions carefully before attempting to respond.

Question 6

This question tested candidates’ knowledge of the role of governments in their country. The question was

attempted by approximately 63 per cent of the candidates. Performance on this question was

unsatisfactory. The mean mark was 6.84 out of 20.

Part (a) required candidates to identify one social service provided by the government of their country and

evaluate its impact on the country. This part of the question was not well done as candidates seemed to

have confused social services with utilities. Generally, candidates were unable to identify the social

services provided by governments of their country. The better candidates identified old age pension,

public transportation (PTSC, JUTC) including free bus tickets for students and the free bus pass for senior

citizens; education including book rental and the School Feeding Programme and health while the weaker

candidates identified all the public utilities, for example, water (WASA).

In Part (b), candidates were required to describe three given functions of government. This question

proved to be challenging for most candidates. Many of them seemed not to have understood what was

meant by national security, maintenance of a safe environment and job security. They interpreted

maintenance only in terms of crime fighting and job security as people guarding the business. In (b) (ii),

the candidates needed to explore regulations made by the Central Bank and government policies for

investors, for example, depositors’ insurance.

For Part (c), candidates were required to outline two forms of assistance offered by Caribbean

governments to businesses. This part of the question was fairly well done. The better candidates indicated

assistance through Carifesta, local trade fairs, subsidies, public transport for workers to and from work

and training of employees, while the weaker candidates wrote only about physical security for business.

To improve their responses, candidates needed to mention protectionist methods used by the government,

for example, the use of tariffs and taxes to deter competition.

In Part (d), candidates were required to discuss two actions which the government can take to protect the

environment. This part of the question was generally well done. Those who did not do well interpreted

actions government could take based only on controlling criminal activity. Candidates were able to

identify passing laws and penalties but were not able to identify agencies like the Environmental

Management Agency (EMA) and the Environmental Protection Act.

The following are suggested responses to Question 6.

(a) One social service is the provision of health. The government of Jamaica provides public hospitals

and clinics and other health care facilities to assist the sick to get back to health. Apart from

providing the necessary upkeep for these facilities they pay the salaries and wages of the various

healthcare professionals such as doctors and nurses and other support staff. This has helped the

poor and less fortunate who may not be able to pay for their healthcare to get well and be

productive. However, there is need for more public hospitals in the major towns and for the quality

of the service at these facilities to be improved, so citizens can be assured that their tax dollars are

being spent properly.

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(b) (i) National security: In carrying out this role, the government will ensure that there is security and

public order for the citizens of the country since the main purpose of the government is to protect

the life and property of its people. It will therefore maintain its police force, military, as well as its

courts and prison systems. While the police force is concerned with internal security, the military

focuses on external security.

(ii) Maintenance of safe environment for investors: Governments aim at having stable economies so

that they can attract investor. To ensure this, they will aim to keep crime and violence at very low

levels. They also ensure that the financial and banking systems are viable. Therefore, they will put

policies in place to ensure that internal or external investors may move their profits when they

wish.

Job security: Through their various labour laws, governments put in place measures to ensure that

workers are not unfairly treated. There are laws against unfair dismissal and for employers and

employees to uphold the terms of their contracts. Employers are obligated to compensate

employees who lose their jobs through no fault of theirs.

(c) Two forms of assistance which government offers to businesses are:

• Governments may provide financing to businesses by way of subsidies or cash grants. This

often assists firms to achieve stability and provide the goods and services as well as

employment to the people of the country.

• Through trade fairs sponsored by governments, firms get an opportunity to market their

goods and services.

(d) Two actions which the government can take to protect the environment are

• The government can put in place the legal and institutional framework for managing the

environment. They will ensure the establishment of certain agencies to develop policies and

guidelines for protection of the environment.

• Governments may also pass laws to protect the environment, for example, those dealing with

public health, fisheries, beaches, forestry and mining. They could even pass laws against

vehicles emitting too much fumes into the atmosphere.

Recommendations

Teachers need to ensure that students can make the distinction between social services and public utilities.

The terms: national security, maintenance of safe environment for investors and job security need to be

clearly explained in the economic setting so candidates do not become confused.

Question 7

This question tested candidates’ knowledge of human resource and economic problems in the Caribbean.

Approximately 30 per cent of the candidates attempted this question. The mean mark was 6.10 out of 20.

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In Part (a) (i), candidates were required to define the term ‘human resource’. This part of the question was

fairly well done. However, some candidates confused a natural resource with human resource as well as

equated man-made resource with human resource.

For Part (a) (ii), candidates were required to outline three factors that affect human resource development

in a named Caribbean country. Some candidates were unable to identify a CARICOM country and so

they were unable to outline those factors pertaining to the CARICOM country.

Part (b) required candidates to state two ways in which human resources can be developed. This was

poorly done. The candidates took a narrow view of development of human resources. Their responses

were limited to money, hence they were unable to discriminate the factors applicable to the question and

so gave the same response as for Part (a) (ii).

In Part (c), candidates were required to identify two major economic problems facing Caribbean countries

and discuss one measure that can be used to address each problem. Part (c) was generally well done.

However, some candidates provided geographical and sociological problems, hence, they were unable to

provide solutions to the problems.

The following are suggested responses to Question 7.

(a) (i) Human resources refer to the sum of all humans who possess skills, experience, knowledge

and training to be part of the labour force.

(ii) In Trinidad and Tobago the migration of skilled workers cause a depletion of labour.

Also, the curriculum is limited in its offerings to develop the attitudes, skills and

knowledge of individuals. The provision and accessibility of health care to all would

improve the quality of the human resource.

(b) The country should limit the importation of both semi-skilled and skilled labour in order to

develop its own expertise. Employers should improve working conditions/environment for their

employees such as providing ergonomically designed workspaces, safe equipment and clothing.

(c) One major economic problem is the lack of infrastructure such as seaports and airports for the

movement of goods and services. This can be corrected by government maintaining existing

infrastructure as well as investing in the upgrading of the infrastructure. Another is inflation which

is the persistent rise in the general price level as seen in the rising prices of imported food. The

government can place greater emphasis on improving the agricultural sector to increase food

production, lower demand for imported food and so reduce the import bill and food prices.

Recommendations

Students need to be more knowledgeable of the global and business environment in which they live. They

must be aware of economic problems of the Caribbean and practical and realistic strategies for addressing

these problems.

They need to keep abreast of political and socio-cultural developments in the Caribbean. They must be

able to identify the member states of CARICOM.

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Paper 03/2 – Alternative to School-Based Assessment

For Paper 03/2, candidates were given a case and a template for a business plan and were required to

complete the business plan by answering 14 questions based on the three profiles. This year’s case

related to a private limited auto body repairs company owned and operated by two brothers who had

recently graduated from a technical institute, and who wanted, through their entrepreneurial effort, to

expand the business which they started in their backyard.

Generally candidates did not perform well on Profiles 1 and 3. The highest mark was 6 out of 10.

However, performance on Profile 2 was good. The mean mark was 14.1 out of 20.

Operational Plan

1. Nature and Type of Business

- Candidates seemed to have had difficulty classifying the business based on its ownership

type. The fact that the name of the company included the term ‘limited’ did not provide a

clue to candidates. The majority of them said ‘partnership’ because there were two

individuals involved in the business. Expected response: Private limited company

- The majority of candidates were able to correctly identify the types of services offered.

Many of them stated that the individuals were involved in delivering the services. Expected

response: Car body repairs and painting

2. Internal Structure of the Organization

The majority of candidates were able to draw the organizational chart and identify both the levels

and positions. However, some candidates did not attempt the chart at all.

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3. Management Functions

1. Weaker candidates were unable to identify the management functions and to use the jargon,

for example, planning, staffing, controlling and coordinating. Expected response: Dave heads

the straightening department and supervises five helpers. Steve chairs board meetings and

manages the painting department.

2. The majority of candidates were able to identify the special skills of each of the brothers that

would assist them to operate the business successfully.

Dave – Straightening and welding

Steve – painting, completed a course in Business Management

Recommendations

• Candidates need to study organizational structures and practise representing them as charts as well as

learn how to interpret these charts.

• Candidates need to pay closer attention to the steps in the management process and be able to identify

them in a case.

Marketing Plan

4. Ethical Issues

Candidates were able to identify the ethical issues that could affect the business negatively. These

included pollution, including noise pollution, improper disposal of waste, observance of minimum

wage legislation, non-compliance with safety standards, unfair trade practices.

5. Market research

The majority of candidates were able to describe the data collection strategies that were most

likely used to collect data to inform the decision to expand the business. Research was the main

source from which much of the information was obtained – individual interviews. Secondary

sources including newspaper reports on the importation of foreign used cars, trade journals,

statistical reports, budget speeches.

6. Industry Trend

The majority of candidates were able to identify the industry trends that could have informed the

brothers’ decision to expand the business. Such trends included the type of goods/services

provided — different colour vehicles, the type of goods/services demanded — on time delivery.

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7. Size of the Market

Candidates were able to recognize that the brothers would face competition. However, a

significant number chose to give an exact figure rather than state that they would receive

competition from other competitors outside of Martel’s garage. Moving to the city will position

the business near several other body repair shops and the competition will be fiercer than at the

original location where there was only Martel’s garage. There could be similar type businesses in

the industrial estate.

8. Target market

The majority of candidates were able to identify the target market. However, they were unable to

adequately describe them. The individuals who bought foreign used cars, which are mostly

coloured white, prefer brighter colours. This information came from careful observation.

9. Pricing Strategies

The majority of candidates failed to adequately describe the pricing strategy used — three times

the estimated cost of labour and raw materials for the particular job.

10. Promotional Strategies

Candidates were able to list the four promotional strategies used by the firm without much

difficulty thus earning the maximum available mark — using flyers, placing stickers on completed

jobs, giving calendars and key rings with the firm’s logo, placing ads on radio, television and

Internet broadcast media, sky writing, business cards.

11. Location of Business

The majority of candidates were able to provide two advantages of the industrial estate where the

brothers planned to relocate the business. The industrial park is well supplied with utilities —

telephone, electricity, water and provision for proper waste disposal, security and rental rates are

subsidized by government.

12. Consumer Organization

The majority of candidates were unable to identify the consumer organizations from which

consumers can seek redress if they were dissatisfied with the service offered by Dave and Steve.

Some candidates actually named Martel’s garage as the option for redress. Expected response:

Bureau of Standards, Ministry of Legal Affairs.

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13. Executive summary

The majority of candidates were unable to write an adequate executive summary which captured

the main areas of the plan. Expected response: New Look Auto Body Works Ltd is a successful

automobile repairs firm. It is operated by two brothers who are primary shareholders. The

brothers are certified and highly skilled in the art of body car repairs. Their customers are

assured excellent service and this keeps them ahead of their competitors. There is a high demand

for changes to the colour and repairs of cars due to the rapid expansion of foreign used-car

imports, along with the inability of firms in the area to meet the need for these services.

Recommendations

• Students need more exposure to real-life application of business principles. This would help them

to become more familiar with concepts such as consumer protection agencies and their roles.

• Candidates need to be taught how to select pertinent ideas from cases and how to summarize them

into executive summaries.

Financial plan

14. The performance of candidates in this section clearly indicated that they were not familiar with

basic accounting principles. The majority of them failed to score the maximum available mark.

Some of them failed to score in this area.

Expected Response:

i. Bank balance = $53 000

Net Book value of Assets = $ 100 000

ii. Sales = $112 800

Gross profit = $75 200

Wages = $25 600

Total Expenses = $35 600

Recommendations

Candidates need to learn basic accounting principles so that they can competently prepare and understand

business plans.